This Chemical Company's Net Profit Up 52% YoY In Q1, Stock Grew 955% In 5 Yrs, Buy: KR Choksey Suggests

Top brokerage firm KR Choksey recommends investors to buy the stocks of Balaji Amines Ltd. Net Profit in Q1FY23 stood at Rs. 1,480 Mn showing an improvement of 51.95% on a YoY basis and 13.15% on a QoQ basis.

Stock To Buy: Target Price & Financial Result

The Current Market Price (CMP) of Balaji Amines Ltd. is Rs. 3557. KR Choksey has estimated a Target Price for the stock at Rs. 4313. This stock has the potential to give a 21.3% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 11,610 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 3557
Target Price	Rs. 4313
Potential 1 year return	21.30%
52 week high share price	Rs. 5,223.55
52 week low share price	Rs. 2,692.75

During the quarter, Balaji Amines Ltd. reported robust revenue of Rs. 6,702 Mn, which grew 48.70% YoY, but fell 13.97% QoQ. Such performance was mainly driven by higher realizations from Amines & specialty chemical segment (up 55% YoY). On the operational front EBITDA in Q1FY23 stood at Rs. 2,148 Mn (up 51.69% YoY / up 10.59% QoQ), OPM improved by 63bps YoY and 712 bps QoQ to 32.05% in Q1FY23.

Higher input costs kept the company's margins flattish on QoQ basis. Its NPM stood at 22.08% (45 bps YoY / 529 bps QoQ). EPS during the quarter came at 37.95 against 27.90 in the same quarter last year.

Advantages Of The Stock: KR Choksey

"The company's amines & specialty chemical segment was up 55% on YoY basis. Total volumes stood at 27,358 MT for Q1FY23 as against 25,620 MT in Q1FY22. We believe its stronger product mix, ongoing healthy pricing realizations across the majority of its products, and rise in the operational leverage owing to a surge in volume offtake were the main drivers of the improvement in operating margins. Its defined Capex plans will add fuel to the growth story in the coming years. At a current market price of Rs. 3,557, Balaji Amines Ltd. is trading at a P/E valuation of 24.91x/19.38x FY23E/24E earnings. We maintain 'Buy' recommendation and apply P/E multiple of 23.5x (unchanged) to its FY24E earnings," the brokerage firm said.

Company portfolio

Balaji Amines Ltd. is a specialty chemicals company, it is one of the leading manufacturers of Aliphatic Amines in India, specialising in manufacturing Methylamines, Ethylamines, Derivatives of Specialty Chemicals and Pharma Excipients. The company intends to start the operation of its DMC plant by the end of Aug 2022. Under phase 1 of its greenfield project Unit IV the plant is expected to have manufacturing capacity of around 15,000 tpa of DMC. Its other CAPEX are in line with the plan mentioned earlier which includes setting up of New N-Butylamine plant (capacity 15,000 tpa), Acetonitrile plant (capacity 15,000 tpa), Methylamine plant (capacity 40,000 tpa), DMF plant (capacity 30,000 tpa). The entire capex is likely to be funded by internal accruals.

Disclaimer

The above stock was picked from the brokerage report of KR Choksey. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.